Fact Sheet 27a:
Frequently Asked Questions about Debt Collection
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Privacy Rights Clearinghouse
- Do debt collectors have to follow any law?
- A debt collector keeps calling for someone I do not know. How can I make them stop calling?
- I am a victim of identity theft. How can I get debt collectors to stop calling?
- Can a debt collector reveal information about my debt to my family, friends or boss?
- How long does a delinquent debt remain on my credit report?
- If I pay a delinquent account, will that remove it from my credit report?
- I have a debt older than 7 years. Should I pay it off even through it no longer appears on my credit report?
- A debt collector has violated my rights. Can I sue?
- I have bad credit and am considering paying a company to fix my credit. Will this work?
- I owe a debt and I am trying to come up with a way to pay. But in calls to me the debt collector is threatening and rude. How can I stop this harassment?
- I was contacted about a 10-year-old debt. Isn’t there a limit on the time for collections?
- Can government agencies use private debt collectors?
- I had huge medical bills last year and got behind. Can medical bills be sent to a collection agency?
- A debt collector says I owe fees that are almost as much as the original debt. Is this allowed?
- May a debt collector access my credit report?
- I got a call from an attorney about an old debt. Is this person subject to the FDCPA?
- As a small business owner, am I protected by the FDCPA?
- I had an account sent to collections. Now the original account and the collection both appear on my credit report. Is this wrong?
- Am I responsible for paying the debts of a deceased relative?
- Someone claiming to be a collector with a federal agency threatened to have me arrested over a debt I know nothing about. What is going on?
1. Do debt collectors have to follow any law?
Yes. The federal Fair Debt Collection Practices Act (FDCPA), 15 USC §1692-1692o, says collectors cannot use abusive and deceptive practices. (For more on prohibited practices identified by the FDCPA, see Question 10.)
In addition to the federal law, many states have adopted laws that provide more protection against abusive collection practices. For example, the federal FDCPA applies only to third-party collectors, but not to creditors attempting to settle their own accounts. State laws may, however, apply whether the debt is being collected by an outside collector or the creditor.
For additional information on the FDCPA as well as a list of state laws and publications, see PRC Fact Sheet 27, Debt Collection Practices: When Hardball Tactics Go Too Far, www.privacyrights.org/fs/fs27-debtcoll.htm.
Debt collectors may also be subject to other laws. For example, the Fair Credit Reporting Act, 15 USC §1681, prohibits the sale or transfer of a debt caused by identity theft. For more on debt collectors and identity theft, go to Question 3.
2. A debt collector keeps calling for someone I do not know. How can I make them stop calling?
Write to the debt collector. Send your letter certified, return receipt requested. For an example of what to say, see these sample letters, www.privacyrights.org/Letters/letters.htm#Debt:
- if you are the alleged debtor and want to cease calls to you, see Sample Letter 4
- if the debt is someone else's and a collector is contacting you about it, see Sample Letter 6.
- police report
- fraud affidavit
- letters form companiew acknowledging the debt is not yours
Once you provide information that you are an identity theft victim, the collector must:
- stop collecting on the debt and investigate
- notify the original creditor about the fraud or identity theft
- give you information about the debt, such as account applications and statements
The PRC has a sample letter available at: http://www.privacyrights.org/Letters/debt3.htm.
No. Under the Fair Debt Collection Practices Act (FDCPA) discussions about the debt can only be held with (1) the individual, (2) the creditor, (3) an attorney representing one of the parties, and (4) a credit bureau. Public airing of your business intended to shame you into paying a debt is not allowed. Debt collectors cannot:
- exchange (with other agencies) information about individuals who allegedly owe a debt
- distribute a list of alleged debtors to its creditor subscribers
- advertise a debt for sale
- compile a list of debtors for sale to others
- leave messages with third parties, asking them to have the debtor call the collector
If a debt collector does not know your name and telephone number, family members or neighbors may be contacted to find out how to locate you, but the collector
- may not tell others you owe a debt or discuss details of the account
- must identify himself (by name, but not necessarily as a debt collector)
- must identify the name of the collection agency only if asked
- can only contact the party once unless the collection agency has reason to believe the person has new information
- cannot leave information about a debt on a third party’s answering machine or voice mail
Please note that contacts with a spouse, the parent of a minor, a guardian, co-signer, executor, or administrator are considered the same as contacts with the debtor under the FDCPA.
Delinquent debts remain on credit reports for 7 years. Chapter 7 bankruptcies remain on credit reports for 10 years.
No. Payment will not automatically remove the debt. You may be able to negotiate removal of the negative information as part of the payment agreement with a third-party collection agency. The original creditor is not as likely to negotiate removal of the negative information.
If you do attempt to negotiate removal of the negative information from your credit report, make absolutely sure to get the terms of the agreement in writing and signed by someone with the authority to request removal of the information. This is essential because if the collection agency does not follow through with its promise to contact the credit bureaus you can send the written agreement to the credit bureaus yourself.
A good resource for help with re-establishing good credit is a member agency of the National Foundation for Consumer Credit, such as the Consumer Credit Counseling Service. These nonprofit groups have offices in most cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
Beware of other credit repair services. Generally they promise a lot, charge a lot and, deliver little. For more information about credit repair services see www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm.
If you are still being contacted about a debt that is this old, quite likely this account has been sold and perhaps resold a number of times. There is a thriving business in debt reselling. Some companies buy old debt for pennies on the dollar. Companies then stand to reap huge profits if you agree to pay the original amount owed. As we have said, there is no statute of limitations on how long a collection effort can go on, but your state may have a statute of limitations on how long a creditor or collector has to sue you.
When the debt is older than your state's statute of limitations allows for a lawsuit, the debt is said be "time barred." According to the Federal Trade Commission, a state's statute of limitations may be as long as ten years but is generally from three to six years.
For more on "time barred" debts and what you can do when contacted about an old debt, see the FTC's publication entitled "Time-Barred Debts": Understanding Your Rights When it Comes to Old Debt: www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt144.shtm
You may feel you have a moral obligation to pay all debts, no matter how old. Some experts recommend not paying the debt that is very old. In many states, paying an old debt may reactivate the statute of limitations on how long a creditor can sue to recover the debt. If this results in a court judgment, the negative judgment will stay on your credit report for seven years.
This is a complicated decision and you would benefit from consulting a member agency of the National Foundation for Consumer Credit, such as the Consumer Credit Counseling Service. These nonprofit groups have offices in most cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
8. A debt collector has violated my rights. Can I sue?
Yes. The Fair Debt Collection Practices Act (FDCPA) allows individuals and class action plaintiffs to sue in federal or state court within a year of the violation. Under the FDCPA, if you win, you may recover actual damages plus up to $1,000. Attorney fees and court costs may also be recovered. Members of a class action may recover actual damages plus a total of $500,000 or one percent of the net worth of the debt collector.
Attachment A to this guide, www.privacyrights.org/fs/fs27plus.htm, may have information about collection laws in your state.
There are many private practice attorneys who specialize in assisting consumers who have experienced violations of state and federal debt collection laws. The web site of the National Association of Consumer Advocates, www.naca.net, provides a directory of member attorneys. The search process enables you to find attorneys near you and to specify those with debt collection experience, http://www.naca.net/find-attorney.
9. I have bad credit and am considering paying a company to fix my credit. Will this work?
No. Companies or individuals promising quick fixes are almost always fraudulent. The important thing to remember is that no one can have accurate information removed from the credit file. The law offers some small protection to consumers who deal with so-called "credit doctors" or "credit repair clinics." Such companies are prohibited from charging a fee before
A better alternative for help with re-establishing good credit is to contact a member agency of the National Foundation for Consumer Credit, such as the Consumer Credit Counseling Service. These nonprofit groups have offices in most cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
Beware of other credit repair services. Generally they promise a lot, charge a lot and, deliver little. For more information about credit repair services see www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm. completing a promised service.
10. I owe a debt and I am trying to come up with a way to pay. But in calls to me, the debt collector is threatening and rude. How can I stop this harassment?
This is a very unpleasant situation. Certainly, abusive, threatening, and obscene language is more likely to be part of a telephone call than a written communication. Collectors know the rules of the game about such conduct. When this happens, ask for the caller’s name and the name of his or her employer. Make notes recording the content of the call as best as you can.Then send a written letter requesting that the debt collector only contact you in writing. In your letter explain the abusive behavior. Send this request certified with return receipt requested.
We have sample letters available at www.privacyrights.org/Letters/letters.htm#Debt. You should also request in writing that the debt collector not contact you at work.
The following practices by a debt collector are in violation of the Fair Debt Collection Practices Act (FDCPA):
- claiming to be an attorney or government employee when it is not
- sending you documents that look like legal papers when they are not
- stating that forms sent to you are not legal documents when they are
- saying that you committed a crime
- saying it will garnish your wages or sell your property if it is not legal to do that
- saying it will sue you, if the collector doesn't intend to sue
- not being truthful about the amount of money you owe
- saying you will be arrested if you don't pay the debt
- threatening you with violence
Both the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) investigate FDCPA violations, so you can complain to both agencies. For more information see section 7 of our Fact Sheet 27, available at www.privacyrights.org/fs/fs27-debtcoll.htm#7.
You may also decide to sue the debt collector. Even if you decide to sue, it is still a good idea to complain to the FTC and CFPB about abusive practices.
To read the FTC’s report to Congress on FDCPA complaints and enforcement actions, visit the agency’s Web site at http://www.ftc.gov/os/2011/03/110321fairdebtcollectreport.pdf.
Abusive debt collection practices should also be reported to your state Attorney General. The FDCPA allows state authorities to file an action against a debt collector. Abusive collection practices may also be a violation of state laws. To find the contact information for the Attorney General’s office in your state, visit www.naag.org.
There may be a limit on the time a collector has to sue you to collect the debt. The statute of limitations may vary from state to state. However, there is generally no limit on how long a company can attempt to collect on a debt.
Yes. One example is the Internal Revenue Service (IRS). In 2006 the IRS made a rather controversial announcement when the agency said it would contract with private collectors to recover some delinquent tax accounts. However, it terminated this practice in 2009.
Another example is the U.S. Department of Education. If you are in arrears on a student loan guaranteed by the federal government, you may hear from a private collection agency. More on the Department’s use of private debt collectors can be found at www.ed.gov/offices/OSFAP/DCS/faqs.html#CAs.
The Department of Education states that collections by private firms are subject to the FDCPA as well as the Privacy Act. Debt collections by private debt agencies are not limited to the federal government. For example, a city may contract with a private debt collector to recover overdue parking fines. If you are contacted by a debt collector that claims to be under contract with any government agency, it is a good idea to verify the collector’s authority by contacting the agency directly.
13. I had huge medical bills last year and got behind. Can medical bills be sent to a private debt collector?
Yes. HIPAA, the federal medical privacy regulation adopted by the U.S. Department of Health and Human Services, allows certain information to be shared with a collection agency or credit bureau. The following statement about medical information and collection agencies is from PRC Fact Sheet 8a, HIPAA Basics: Medical Privacy in the Electronic Age, www.privacyrights.org/fs/fs8a-hipaa.htm:
An unpaid bill, like any other debt claimed to be owed, may be reported to a collection agency. Generally, the doctor or hospital enters into what's called a "business associate" agreement with a debt collector. Then, information can be disclosed to the collector, but the doctor or hospital should disclose only the minimum necessary to collect payment.
What's more, an unpaid medical bill can appear as a negative entry on your credit report. Information that can be disclosed to a credit bureau about you includes:
- Your name and address
- Date of birth
- Social Security number
- Payment history
- Account number
- Name and address of the health care provider or health plan that says you owe the money.
A study by the Federal Reserve found that over half of all collections noted on credit reports were for unpaid medical bills, www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf.
The FDCPA says a collector may not collect any amount greater than your debt, unless your state law permits such a charge. PRC Fact Sheet 27 includes a list of states with debt collection laws and publications. www.privacyrights.org/fs/fs27plus.htm.
You should also contact your state Attorney General for information on fees and other collection issues. You may connect to your state Attorney General through the web site for the National Associate of Attorneys General, www.naag.org.
15. May a debt collector access my credit report?
Access to your credit report is limited to certain “permissible purposes” that are listed in the Fair Credit Reporting Act (FCRA). One of the purposes listed in the FCRA is “collection of an account.” A collection agency may also report to a credit bureau, but the FDCPA prohibits giving false information to anyone, including a credit bureau.
16. I got a call from an attorney about an old debt. Is this person subject to the FDCPA?
Attorneys who collect debts for third parties on a regular basis are “debt collectors” under the FDCPA. Many attorneys as well as non-attorney collection firms are often members of the debt collector’s trade association, ACA International (the American Association of Credit and Collection Professionals.) The ACA’s Web site includes a member look-up service, http://www.acainternational.org/memberdirectory.aspx as well as an online complaint form to register problems with members. www.acainternational.org/default.aspx?cid=101
A complaint filed with a trade association is not a substitute for complaining to a government agency such as the FTC or your state Attorney General. Nor is a complaint to the ACA a substitute for filing your own lawsuit in egregious cases. However, members of organizations such as the ACA have agreed to follow certain professional guidelines.
17. As a small business owner, am I protected by the FDCPA?
Probably not for business debts. The practices prohibited by the FDCPA apply to personal, family and household debts, including medical care and the purchase of an automobile.
18. I had an account sent to collections. Now the original account and the collection both appear on my credit report. Is this wrong?
According to the credit reporting agency Experian, both entries are considered part of your credit history, and once the collection action is entered, that becomes the active account. However, the delinquency date reported by the original creditor should be the same as that reported by the collector. The delinquency date dictates the establishment of the seven-year period. And that is how long the account will remain on your credit report.
The delinquency date that triggers the removal of negative information from your credit report should remain the same no matter how many times the debt is sold. Once the seven- year period has run its course, all entries involving the account should be removed from your credit report. This includes the original creditor’s charge-off and any collectors that have subsequently bought or sold the account.
If you have had an account sent to collections, this is yet another good reason to check your credit report carefully to make sure all entries have been deleted at the appropriate time. And, during the time the negative account remains active, check your report to be sure the original delinquency date is the one consistently reported on entries by the original creditor and all collectors. Add this to your checklist of things to review when you order your free annual credit reports through www.annualcreditreport.com.
For further discussion of this “dual” reporting, read the “Ask Max” question and answer on the Experian Web site. www.experian.com/ask_max/max012506c.html
No. When an individual dies, it’s not unusual for creditors to attempt to collect debts from surviving relatives. However, you are not responsible for the debts of family members who were not your spouse.
If you are contacted by a debt collector, advise them that the person they are trying to reach is deceased. If you know the information, you may also want to provide them with the contact information of the deceased’s personal representative (the individual in charge of administering or executing the estate). If a debt collector persists in contacting you, send them a certified, return-receipt letter advising the collector to stop all contact. (see our Letter to Debt Collectors at http://www.privacyrights.org/Letters/debt2.htm) Be sure to keep a copy of this letter and your return receipt. According to the Fair Debt Collection Practices Act, a debt collector may not continue contacting you after you have sent them this letter except to acknowledge your letter or notify you of specific actions, such as filing a lawsuit.
For more information, read the FTC’s Alert: “Paying the Debts of a Deceased Relative: Who is Responsible?” http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt159.shtm
It is possible the caller is not a legitimate debt collector at all. The FTC, in February 2012, filed a lawsuit against one such "fake" debt collector. According to the FTC, signs a "fake" debt collector is calling include the caller's refusal to provide an address or telephone number. The caller may also ask you to provide personal information such as your Social Security number, or bank and credit card account numbers. Scare tactics such as threats of jail, lawsuits or garnished wages are also used by "fake" collectors.
For more on "fake" debt collectors, see the FTC's consumer alert entitled, "Who's Calling? That Debt Collector Could Be a Fake": www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt076.shtm
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